Employer pay systems should be carefully designed to attract and retain talent. Annual salary increases done automatically, just for showing up for one more year of service, is nuts. I have heard employees say, “I have been here four years and I am making the same as when I started”—when in fact they have been at the company one year, four times! In other words, standing still does not merit more pay.
Properly designed systems can keep a company from going broke and can help to unlock the potential of any workforce.